Inflation Concern Drives Japanese Stocks Down in Six Weeks
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Japanese stocks incurred heavy losses in six weeks as escalating commodities prices ignited fears that inflation will eat up corporate earnings, as the wavering US housing market crossed out chances for the US economy’s recovery.
Tiremaker Bridgestone Corp. led other tire manufacturers lower following the rise of rubber futures, which was to be the highest in 28 years. On the other hand Daihatsu Motor Co. suffered the most in nine months when Daiwa Securities Group Inc. announced that the costs of materials will pare profit. Meanwhile, Nissan Motor Co. went downhill when Merrill Lynch & Co. downgraded shares. The number of properties that are unsold in the United States surged to record high.
“We’re not going to see any significant reasons to buy in the next few months, and benchmarks are in for some declines. Inflation is an extremely big problem, as it means profit margins are going to be squeezed,” said head of investment management Koshi Kumagai, BNP Paribas Asset Management, Tokyo.
The Nikkei 225 Stock Average declined by 322.01, or 2.3 percent, to 13,690.19 when Tokyo trading closed. The Topix index fell 32.51, or 2.4 percent, to 1,344.18. The decline of both gauges was the worst since April 14. As if on cue, all 33 industry groups in the Topix also fell.
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